Groupon Sinks Another Business

Receive the latest inc-well updates in your inbox

There's a new rhetorical question on the rise: If a company runs a Groupon that completely decimates that business, whose fault is it?

It's becoming a more and more common occurrence -- the most recent before this week was Drew's Eatery on Montrose, when owner Drew Baker fired off a pointed missive blaming deals sites for doing his business in.

Then there was the infamous cupcake incident. Now, comes this: Food For All Market, a Philadelphia-based "gluten-free version of Panera Bread" is throwing in the gluten-free towel after a "disastrous experience using Groupon." Newsworks.org has more.

"I lost a lot of money when I did Groupon," owner Amy Kunkle told newsworks.org. "I just had a lot of difficulty recovering from that." Kunkle also explains that she didn't fully understand the risks of running a deal with Groupon.

Basically, last June, Food For All Market ran a three-month deal with Groupon "to allow an unlimited number of customers to get $30 worth of merchandise for $15. But Kunkle lost more than 50 percent on each transaction because Groupon took an additional $8 per sale." Even without Groupon taking its part, the numbers wouldn't seem to add up, would they? When all was said and done, Kunkle's business was in the red nearly $10,000. That's bad.

And even worse, Kunkle thought her business model was sustainable before the Groupon. Famous last words? Maybe. Maybe not. But folks should slow their roll and not assume a Groupon is mandatory, or a save-all salve for an ailing business. Run the numbers. Calculate the risks. Don't rush into it.

And while you're at it, read more about what happened over at newsworks.org.

David Wolinsky is a freelance writer and a lifelong Chicagoan. In addition to currently serving as an interviewer-writer for Adult Swim, he's also a columnist for EGM. He was the Chicago city editor for The Onion A.V. Club where he provided in-depth daily coverage of this city's bustling arts/entertainment scene for half a decade. When not playing video games for work he's thinking of dashing out to Chicago Diner, Pizano's, or Yummy Yummy. His first career aspirations were to be a game-show host.